This week’s newsletter is chock full of items about new technologies, new products, new investments, new initiatives, and new collaborations – strong evidence that these are exciting times in animal health.

But not everything in our industry is bullish.  The University of Minnesota recently published market research that showed the strength of the plant-based movement.  31% of consumers said they would eat more plant-based protein over the next 5 years, and 36% said they were concerned about the environmental impact of animal production.  Although 80% said they preferred beef, pork and poultry as their protein sources, 20% did not.  To me, these data are surprising, and sobering for animal agriculture. And they don’t even address the growth in milk substitutes!  While I support people’s right to choose plant-based diets, we have to keep in mind that they reduce demand for meat, and thus animal health products.  It motivates me to grill some steaks this weekend.  You know, to help the industry.

John Volk, Senior Consultant

The first commercially available African Swine Fever (ASF) vaccine in the world is currently being field tested for safety and efficacy in Vietnam. While this is an important milestone in ASF control and prevention, we should be aware that this is a modified live virus (MLV) vaccine and a DIVA (differentiate infected from vaccinated animals) diagnostic assay that can distinguish vaccinated pigs from those infected with wildtype ASF viruses has yet to be developed.

To effectively control and eradicate ASF, researchers should continue to develop subunit (proteins and peptides) and nucleotide (DNA and RNA) vaccines that are inherently safer and DIVA compatible. DIVA assays are extremely useful for the control of a newly emerging infectious disease or a foreign animal disease as they can enable the “vaccinate-to-live” strategy by which vaccinated animals can be raised and processed for food production and consumption and/or sold into international trade.

In addition to making safe and efficacious ASF vaccines affordable and available worldwide, we should also prioritize R&D efforts to increase our understanding of ASFV virus survival in the environment and evaluate low-cost and environmental-friendly virucidal disinfectants under field conditions.  It has taken a long time to get this far with an MLV vaccine for ASF and let’s hope DIVA vaccines will be field tested soon.

Jishu Shi

This week’s newsletter contains several announcements that are straightforward alone but indicate some significant shifts when taken together.  Mars Petcare (owner of VCA and Banfield) announced a significant study that would generate physiological metadata from 20,000 pets. This data could provide strong synergy to the Mars investments in genetics made in recent years. Another Mars subsidiary, Antech, has announced an expanded relationship with cancer test maker PetDx to make the OncoK9 test available to all Antech customers, broadening the reach of this testing technology. Finally, PetSmart has announced a program that will enable independent veterinarians to open a franchised practice in PetSmart locations. Until now, the Mars subsidiary Banfield operates most vet clinics in PetSmart retail locations.

We’ve all watched our industry embrace investments in genetics in a very long-term process with very few obvious near-term benefits. It’s too soon to tell, but the Mars Petcare Biobank could mark the beginning of the next phase where genetics begins to be more closely integrated into normal veterinary practice. In addition, PetSmart’s announcement that they will be opening a program to encourage and develop more independent ownership of in-store clinics provides yet another pathway for veterinarians to find a blend of “old style” clinic ownership with the benefits of the corporate business model that has swept the industry in recent years.

We, like you, will eagerly monitor the changes in landscape as they occur, and we’ll try to help us all make sense of the opportunities.

Jim Kroman

The Great Resignation has been upon the animal health and nutrition industry for more than a year now. The tight labor market has slowed hiring as indicated from a recent Brakke survey of veterinarians  indicates that replacing a veterinarian in a clinic averaged 14 months last year  Similar hardships are faced by most companies in our industry.

What should companies do? One way is to reduce turnover by focusing on your company culture, onboarding, and work flexibility, which have been shown to increase team member satisfaction and loyalty, while making them more productive too.

A recent Gallup study showed that a concerted effort to foster and reinforce a positive culture increases sales by 19% and profits by 29%, while reducing attrition by 72%. Another indicates that clear onboarding improves retention by 23%, while poor training accounts for 40% of resignations. A third revealed that nearly half of respondents indicated they’d accept a lower salary if they could work in a hybrid environment. Thirty percent indicated the ideal work environment is 100% remote. (Source: PharmiWeb)

We are reinvigorating the Brakke Consulting recruiting practice and have recently heled several firms fill key managerial and leadership roles.  And while the workforce may have changed over the years, what has not changed is how important retaining and hiring people are to the success of any company.  We can help.

Jeff Santosuosso

We are hearing (and seeing) about possible food shortages in many places due to a multitude of factors. It is incomprehensible that this could happen in today’s world. But faced with reality, we in animal health must take a more active role in bringing solutions to improve efficiency of food production while ensuring good animal welfare.

The innovation and technology our products bring have a major impact on the availability of food. For example, certain pharmaceuticals such as beta-agonists are currently banned in many countries despite their proven safety and tremendous impacts on feed efficiency. Will the barriers continue when the world is going hungry? Or will we let retail beef consumption drop significantly because it is simply unaffordable due to the high costs of inputs? It will take some brave people from our industry to reopen these discussions.

Now comes the story of baby formula. Again, it’s unfathomable that in our country we would ever run out of such a critical item. I wonder if the CVM could help their colleagues in the FDA because I have found them to be very practical in solving issues, while  adhering to their standards and principles. Earlier in my career, I was involved with an issue of supply with a unique product in the US market. As we were not going to be able to supply, we were able to work with the CVM to have a pragmatic withdrawal that ensured a safe transition for the affected animals. Someone should have really thought through shutting down 40% of the nation’s supply of baby formula!

Paul Casady

Earnings season for 1Q22 is now behind us with the top animal health companies reporting continued strong sales growth.  Excluding the impact of exchange, the scorecard for some in the largest companies for the first quarter is as follows:  Zoetis (+9%), Merck Animal Health (+9%), IDEXX (+8%), Heska (+7%), Covetrus (+6%), MWI (+4%), and Elanco (+2%).  The strong growth was largely driven by the companion animal segment.

As we move further into 2022, there are signs that growth rates may be moderating.  Recent reports indicate clinic visits may be flat to slightly negative in 1Q22.  This is not surprising as the industry saw a surge coming out of the pandemic in 2021.  The overall economic condition of the country is another area of concern with inflation surging.  Some data suggests that the US economy is likely heading toward a recession.  The last time we faced a recession in 2008-2010, vet visits declined by 2-3% annually as consumers juggled pet healthcare with other household spending.

The rest of 2022 will be a delicate balancing act for the industry with rising input costs and wage pressures relative to decisions to increase end-user prices to maintain profitability.    We know that the veterinary industry is not recession proof, but it is rather recession resistant –  people still eat and still take care of their pets.

Randy Freides

Traditionally, veterinary practices have been the leading purveyors of both prescription and non-prescription animal health and nutrition products.  With the advent of Internet sales, that pre-eminent position was seriously challenged.  In reality, it’s one of the most dynamic, rapidly-changing issues in the animal health industry.

Today’s newsletter includes several items relevant to this topic.  In the earnings section, Covetrus and PetMedExpress compete directly or indirectly on one side of the market for home delivery or the other.

This newsletter also features the announcement of a new report that sorts it all out – the Veterinary Home Delivery Report.  This study provides detailed information on the percentage and growth in number of veterinary practices that offer online sales and home delivery, which service providers they use, satisfaction with those service providers, growth rates of online sales, percentage of clients requesting prescriptions for third-party pharmacies, and substantial additional information.  It’s well worth a read and contains a lot of actionable information if you’re involved or invested in animal health product sales.

John Volk

Later this month, scientists around the world will attend the 2022 Global African Swine Fever (ASF) Research Alliance (GARA) Scientific Meeting with the objective to increase our understanding of ASF, which has affected hundreds of millions of pigs in the last few years around the world, especially in Asia. However, science and technology alone are not enough without sensible policies from the government.

The countries of North America and Europe demonstrated decades ago that ASF and CSF can be eradicated with proper government policy and adequate scientific and technological tools. At both local and national levels, governments should develop and implement science-based animal disease outbreak emergency management policies that will encourage the full participation and support of pork producers, processors and consumers. These policies must consider:

1. What will happen if the government does not adequately compensate swine producers for their loss due to ASF outbreaks?
2. What is the best way to cull/dispose of thousands of pigs in a short period of time in a restricted area, considering animal welfare, economic and environmental impact, and technical feasibility?
3. The negative impacts of biosafety measures such as disinfectants on environment, food safety, and human health should be carefully investigated.

Hopefully those attending the GARA meeting will be considering these issues as well as scientific issues and advances.

Jishu Shi

A recent report from the IQVIA Institute entitled “The Use of Medicines in the US 2022” is interesting reading if you believe that trends in human medicine eventually show up in veterinary medicine.  Some notable results…

First, the overall use of telehealth has returned to pre-pandemic levels at the end of 2021, or 1-2% of patient visits.  Mental health saw dramatic increases in telehealth during the pandemic, peaking at about 30% of all visits, and is now about 20%.  Telehealth visits for chronic diseases, like hypertension, diabetes, and HIV/AIDS, peaked between 5 to 11% of visits, but are now down to 1-2%, because these diseases frequently require testing and bloodwork.

Second, spending on specialty medicines in the US is 55% of total net manufacturer revenue.  These medicines treat autoimmune diseases, oncology, and multiple sclerosis and is now about double the 2011 level, which was 28%.

Finally, all the growth in medicine spending in the past 5 years, ($82.0B) has been due to new products ($87.7B).  The volume impact of patented products already launched (+$94B) was completely offset by products going off patent (-$93.0B).

Veterinary medicine often follows in the footsteps of human health, so what can we learn from this report? Innovation focused on specialty products is likely to drive future growth in veterinary medicine, while innovation in services, like telehealth, will be a harder sell.

Bob Jones

Amazon this week announced its inaugural Amazon Pet Day, coming up the first week of May. Many of us in the industry may not think of Amazon as a key player in pet products, but a recent Packaged Facts report found that Amazon was the #1 source for online pet purchases, which they claim now represent nearly one-third of all pet product sales.

Amazon is known to drive increased sales on its platform on its annual Amazon Prime Day: according to one source, retailers enjoy at 20-30% bump in e-commerce sales on Prime Day. One can only imagine how much anticipation there is at those companies selling pet products through Amazon. Will competitors like Chewy, Petco.com and Petsmart.com offer similar deals on May 2, as has happened with Prime Day? Don’t be surprised if they do.

Lynn Fondon